The California Air Resources Board (ARB) is extending and changing its cap-and-trade program for greenhouse gases. We recently submitted comments that outline ways the ARB can improve its proposed updates.
We’ve been an active participant in California’s continuing efforts to improve its cap-and-trade program. Our previous comments in October 2017 and March 2018 suggested that ARB set the allowance price ceiling at least as high as the Interagency Working Group’s Social Cost of Carbon (SCC) estimates. We now recommend that the price floor should also account for the SCC. Setting both parameters appropriately is crucial to ensuring that the program sends effective price signals and accurately reflects the damage caused by carbon emissions. Our comments also address the ARB’s discussion of leakage, offset projects located outside the U.S., and how California can better allocate unsold carbon allowances.